Strategic Planning in For-Profit and Non-Profit Organizations

For-Profit and Non-Profit OrganizationsEvery organization has a mission. The mission of a typical for-profit company is to grow the business and make money. The mission of a non-profit organization is to take care of an unmet need in the community, state, nation or world.

Strategic planning is the process of mapping out goals, resources, market conditions, and ultimately a path for the future of the organization. It tends to be very similar across for-profit and non-profit organizations.

Most organizations set up a strategic planning committee, led by an experienced facilitator. The facilitator helps the committee generate, evaluate, refine and organize ideas on the future direction of the company.

The committee then decides on the best ideas and constructs a plan which specifies a set of goals along with the actions or steps required to achieve those goals. It also makes it clear who is responsible for what, when, where and how.

Dogs vs Cats

One major difference between for-profit and non-profit organizations is staffing. For-profit organizations are run by paid staff. Most non-profit organizations have some paid staff, but unpaid volunteers usually do most of the work.

It’s relatively easy to get paid employees to join a strategic planning committee, but volunteers can be a little more challenging. They have less time to spend on strategic planning, and they are often pulled in multiple directions (family, job, other non-profit organizations, hobbies, etc.). Strategic planning at a non-profit is a bit like herding cats.

Organizational Memory and Continuity

 Another area where for-profits and non-profits often differ is organizational memory and continuity. Of course every non-profit is different, but many suffer from high turnover among board members, volunteers, staff, and even executive leadership.

High turnover, often combined with poor record keeping, leads to problems with continuity and organizational memory. In other words, the organization lurches from one initiative to another as personnel swap in and out. This often leads to problems with funding, execution, and mission creep. Of course the same problems can occur at for-profit organizations, but in my experience (with hundreds of organizations), they are much more common at non-profits.

Scheduling

At a for-profit company, scheduling meetings is fairly easy. Strategic planning is a high priority, and most committee members will set aside time for meetings even at the expense of other things on their schedules. At times of scheduling conflicts, the strategic planning meeting will take priority. Since outside consultants are normally paid to attend, these meetings are a top priority for them.

Scheduling at a non-profit is more difficult and may take more time. While Board members and employees of the non-profit will prioritize these meetings over everything else, volunteers frequently don’t have that luxury. Their first priority is to their own employers and their schedules are not as flexible. It sounds easy, but scheduling conflicts can cause a lot of friction when meetings are rescheduled two, three, or even four times.

Customers

The customer of the for-profit company is the person or organization who buys its products or services.

Non-profit organizations have two separate and equally important customers: those who fund the non-profit and those who receive the non-profit organization’s services. Serving two masters leads to complications.

Mission Creep

Companies are driven by profit, whereas most non-profits are mission driven.

Every organization has to adapt and react to market trends, but for-profit companies seem to have an easier time staying on track. They can (usually) adapt their products and services as needed to survive in the marketplace, without straying too far from their stated mission.

Non-profits have a more difficult time. They have a tendency to follow the money rather than the mission, and can be easily diverted away from their true purpose. Granting agencies, donors, volunteers and sponsors can be petty and capricious. Small non-profits sometimes have to bend to accommodate these whims. If they bend too far, they can lose their way. The strongest non-profits invest considerable energy into diversifying their fundraising efforts so they are less dependent on any one grant, group, or donor.

Creativity and Diversity

Strategic planning committee members at for-profit organizations often have relatively deep but narrow company experience and industry knowledge. The ideas they bring to the table may be limited.

Non-profits generally have the edge here. Volunteers and others often bring a wider variety of ideas to the table from their outside experience. Most for-profit companies hire people who fit a particular mold. They often suffer from groupthink. Non-profits tend to be more diverse, more open to new ideas and new ways of doing things.

Execution

Many organizations have excellent strategic plans Very few actually execute them. Many of these plans just sit on the shelf. Sometimes they become door-stops.

For-profit companies tend to have a better track record when it comes to execution. Paid staff are more likely to follow through than unpaid volunteers. In a for-profit organization, each employee’s livelihood depends (at least in theory) on getting results.

It is much harder to convince volunteers to stick with a program when things get tough. Free pizza and beer can only go so far. The chain of command is a lot looser, and executives and paid staff can’t force volunteers to do anything, they can only ask. The end result is execution tends to be more challenging at non-profits. And when funding problems rear their ugly heads, raising money becomes the focus. Everything else in the strategic plan falls by the wayside.

The Bottom Line

Every organization needs a strategic plan. Some are better at planning than others, and larger organizations tend to be better at planning than smaller ones. Some non-profit organizations excel at planning and also at execution.

All non-profits struggle with mismatches between funding and mission, and volunteers and paid staff. For-profit organizations have their challenges too, but by and large, they have an easier time motivating employees, paying the bills, and staying the course.